Iowa Senator Chuck Grassley says he’ll be voting in tandem with his Republican colleagues in favor of what he calls the “once-in-a-generation” tax cut and tax simplification plan.

The U.S. House is expected to vote first on the measure today and then will send it on to the Senate, where it should also pass.

“I think every Republican is going to vote for it, except (Arizona’s John) McCain who’s going to be absent because of recovery,” Grassley says, “so that would be 51 to 48.” He predicts the bill will be signed into law by President Trump on Wednesday.

Critics say the legislation brings too many benefits for the very wealthy and too few to the middle class, but Grassley disagrees. “Every one of the seven tax brackets gets a tax cut,” Grassley says. “The progressivity, although we don’t have the final tables on this yet, but the tables for the House-Senate bill would’ve shown this, the progressivity is as good or better than existing law today.”

The legislation has been stripped of one element that related to the Affordable Care Act, which Grassley says is a plus. “One of the most regressive things in it, that tax on people that don’t want to buy Obamacare, that’s done away with,” Grassley says, “so that helps the progressivity of it as well.”

Opponents of the tax reform measure say it’s badly lopsided in favor of the ultra-rich and the rewards are far fewer for the middle class, however Grassley says that’s not the case. “The top one-half of one-percent of all the wage-earners in America, by income status, they’re going to pay 38-and-three-tenths percent of the income tax and have about 25 percent of the income,” Grassley says. “Now, that’s very, very close to where it is right now.”

Under the plan, Grassley says six-million lower-income people will no longer have to file federal income taxes. He adds, the middle class pays at the 25 percent rate now, which will be reduced to 22 percent under the plan, plus, he says it covers a much larger group of people than before. Families would also benefit as Grassley says the bill would increase the child tax credit from $1,000 to $2,000.

Governor Kim Reynolds aims to reveal details of her tax plan when she delivers the annual “Condition of the State” message to legislators on January 9, 2018.

The Republican governor, though, has been waiting for Republicans in congress to pass their tax plan.

“What happens at the federal level will have a big impact on what we’re able to do at the state level and so we’re watching very closely,” Reynolds said this morning. “We’re encouraging them to get something done in a timely manner. I’m cautiously optimistic. It seems like there’s great movement, not a lot of differences…It would be great if they were able to get something done next week.”

Earlier this month, Reynolds said her overall goal is to simplify and reduce state income taxes.

Reynolds hosted Linda McMahon, the administrator of the U.S. Small Business Administration, in her Des Moines office this morning. McMahon said there are no “definitive answers yet” on what the GOP’s federal tax package will look like.

“I really do support what the president has been saying for the past week or so and that is in his view we now have the bill that was passed by the House and the bill that was passed by the Senate and his exact words are: ‘Now, we’ve like put it all in a mixer,'” McMahon said. “And it’s getting mixed up and we’re going to be able to pull out the parts that are going to be even better than what either the House or the Senate’s bill is and that’s what I’m expecting to see.”

McMahon said small business owners tell her if they get a tax cut, they’ll invest in their business and hire more workers. McMahon met with a small group of Iowa small business owners in the governor’s office this morning.

This afternoon, President Trump will make a statement from the White House about the pending tax deal. A family from Johnston, Iowa, has been invited to be in the audience.

A coalition of 19 groups is calling on Iowa’s governor and legislators to more than double the state tax on tobacco products. Stacy Frelund, the state government relations director for the American Heart Association, said Iowa’s tobacco tax ranks 29th among the states and hasn’t been raised in a decade.

“Iowa’s tobacco prevention and control program has actually seen significant cuts the last couple of years,” Frelund said this afternoon. “Last year, we had over $1 million that was cut out of that program. and it’s one of the most significant cuts we’ve had in recent years and it’s really changed how a lot of the services are provided in our state.”

Nearly 19 percent of Iowans were smokers in 2014, the last time the smoking rate was measured.

“We’re not seeing very good quit rates in our state,” Frelund said. “It’s been very stalled out when it comes to smoking for both adults and for youth.”

According to the Centers for Disease Control, raising the price of tobacco products is one of the main strategies for reducing smoking rates. Frelund acknowledged raising any tax is “daunting” for politicians, but she argued raising the state tobacco tax by $1.50 would have side benefits.

“Iowa spends about $1.2 billion in annual health care costs directly caused from smoking,” Frelund said. “…That is something to consider as you’re thinking about how this could impact our state.”

Frelund made her comments during a public budget hearing in Governor Kim Reynolds’ office. After the hearing, Reynolds told reporters she hadn’t reviewed the details of the proposal, but she and her staff would examine it.

Groups like the American Cancer Society that have traditionally pushed to reduce tobacco use are part of this coalition supporting the tobacco tax hike, but the coalition also includes eight groups that represent medical professionals. The Iowa School Counselors Association is part of the group as well. Frelund told the governor states with “well-funded” prevention programs are getting results.

“Florida recently reported that its high school smoking rate fell to just 6.9 percent in 2015 and in 2016. That’s way below the national average, so we have states that are making some huge strides when it comes to tobacco control and we’d like to see Iowa get in that line,” Frelund said. “We have seen that kind of result when we did the tobacco tax the last time. We actually had a smoking rate that was down and comparable to Utah, which is lowest in the nation.”

According to Frelund, a $1.50 cent increase in the state tax on a pack of cigarettes, a can of chewing tobacco or a package of cigars would raise more than $100 million in new revenue for the state. She told the governor that money could be used on anti-tobacco programs as well as other health-related programs like obesity prevention and the mental health system.

The administrator of the state’s economic development agency there’s a big need for more housing in Iowa and she’s proposing a change in the way state tax incentives are awarded to “workforce housing” projects.

State income tax credits and sales tax rebates are currently awarded on a first-come, first-served basis for new or renovated housing projects.

“I just don’t think that’s how you run a program and we want to go to the legislature where they would let us make it competitive and we’d do a scoring process,” says Iowa Economic Development Authority director Debi Durham.

Each year, the state awards $20 million worth of tax incentives to developers building housing aimed for working-age Iowans. Durham says the waiting list for these tax credits stretches to 2021. In the future, Durham says the projects should be prioritized and awarded in areas with the most critical housing shortages.

“And then we can be a little bit discerning about how we can distribute it around the state and so that’s one of the changes we want to make,” Durham says. “…If we’re not going to get more capacity in the program, then we need to make sure we’re putting the dollars where they really need to be.”

Iowa’s housing shortage is magnified in smaller cities, where few new houses are being built. Durham’s agency has set aside $5 million in its $20 million yearly tax incentive package for housing projects in “small cities.”

“Places like Tama or Wright County where you’re seeing Prestage go, I mean they’re really, really needing houses up in those areas,” Durham says. “…That $5 million, I think it’s too low. If we had the capacity, I think we need to do a stronger carve-out.”

But given state spending constraints, Durham has presented a “status quo” budget plan to the governor for the coming year.

Many business owners cite the shortage of single-family homes and apartments in Iowa as an impediment to hiring new employees.

State officials have made no change in the official estimate of state tax revenue during the current budgeting year.

The governor and legislators will still have to cut at least $35 million from the current state budget soon, based on a previous tax revenue estimate set in October.

A three-member panel met this afternoon to discuss the state’s economy and set their official prediction of future state tax collections. Retired businessman David Underwood of Mason City said the farm sector is worrisome.

“Somehow or other our farmers enough reserves built up when prices were good that they were able to survive a couple of years of down commodity prices and fluctuations in cattle prices and hog prices,” Underwood said, “but just recently I’ve heard some of the bankers talking about farmers really in trouble now.”

Dave Roederer, the governor’s budget director, said agland values seem to have “stabilized” and he predicted the manufacturing sector is poised for growth.

“Manufacturing is starting to hire, both large and small (factories),” Roederer said. “…Manufacturing represents on a wage basis about 22-25 percent of the wage income that comes into the state, so that is one of the reasons I think that we are a little more positive.”

“Iowa revenues, while still growing, are disappointing for the first five months of the fiscal year,” Lyons said. “There is nothing, however, to indicate that the growth will turn negative, but growth is very slow.”

Lyons, Roederer and Underwood are members of the panel that estimates state tax collections. The group has come under fire for missing recent predictions, forcing legislators to vote to cut the budget and the governor to dip into the state’s reserves to ensure the last state budget didn’t dip into a deficit.

The governor’s budget director characterized the panel’s predictions this way today: “From my perspective, we’re very firmly on the side of we’re not sure what’s going to happen.”

Lyons offered a similar sentiment.

“Forecasting state revenues 18 months or more in the future is always risky and one this is certain: we know that we will be wrong,” Lyons said. “We will either be too high or too low.”

The panel is predicting tax collections will grow by four percent in the next state fiscal year. That’s $9.3 million less than the group’s October forecast.

The Republican leader in the Iowa Senate says legislators should make eliminating the state income tax a “big picture goal.” In the meantime, Bill Dix says lawmakers should cut taxes and cut state spending next year.

“As a state, we need to challenge ourselves in how much it costs to run state government,” Dix says.

Kansas lawmakers dramatically cut state income taxes in 2012 and 2013, but Dix says that experiment failed because officials in Kansas did not make deep enough cuts in that state’s budget.

“We have to redouble our efforts to really reanalyze what our priorities are and how we use your money and what impact that has on the overall economy and growth,” Dix says.

Seven U.S. states do not have an income tax and Dix says the economy in neighboring South Dakota is booming because there’s no income tax in South Dakota.

“The other 11 Midwestern states have all seen a loss in the last decade of wealth, real wealth, in their states,” Dix says.

Dix, who is from Shell Rock, made his comments during a forum sponsored by the Iowa Chamber Alliance, a group that represents the state’s largest chambers of commerce.

Critics of eliminating the state income tax altogether say Iowans will wind up paying more in other taxes. Texas residents do not pay an income tax, but face steep property taxes, for example. Washington state residents don’t have an income tax, but that state’s gas tax is highest in the country.

The biodiesel tax incentive was left out of the latest Congressional tax reform bills, but senators are working separate legislation to extend the credit.

Senators Chuck Grassley of Iowa and John Thune of South Dakota are leading the effort. Grant Kimberley, executive director of the Iowa Biodiesel Board, says he hopes they’ll offer the bill before 2018 arrives.

“Senators were given assurances there would be tax extenders added to some of the end-of-the-year budget bills that have to go through by the end of the year or the early part of next year,” Kimberley says. “That’s what we’re working on and hopefully that will happen.” He says it’s disappointing Congress keeps waiting until the end of the year to make decisions on much-needed tax incentives like the biodiesel credit.

“We’ve had a lot of growth and we’ve had success but it’s been difficult because there have been years where the credit is on again, off again,” Kimberley says. “It’s been six out of the last nine years we’ve had it expire and then be reinstated. It’s hard to make business investments when you have this on again, off again incentive.” Kimberley says the measure the senators are putting together would make the biodiesel incentive a credit for producers rather than blenders.

“The reason being is that we’ve seen significant volumes of imported biodiesel coming into the country,” he says. “It just makes good policy sense to make sure these kinds of credits really go toward domestic production.” Kimberley says the senators believe trying to move the biodiesel tax incentive in a separate measure is better than holding it up in amendments that could have been stripped from the overall tax reform legislation.

The Iowa Chamber Alliance released its priorities Wednesday for the upcoming legislative session.

Tax reform is one of the key issues, and ICA executive director John Stineman says if federal lawmakers pass tax cuts, then state lawmakers have to act to get rid of Iowan’s ability to deduct their federal taxes from their state returns.

“Because if they don’t they wouldn’t be heading off a potential tax increase on taxpayers, so it adds to their motivation,” Stineman says. “Also, it could potentially, we don’t know yet, but it could impact what we target in taxes by what the feds have cut, versus what are taxes are here.”

Stineman says the federal tax reform package may end up having a good benefit for Iowa businesses. “It’s no secret that Iowa’s budget situation is tight and it could work that the federal government cutting taxes actually makes a little bit of cash available to buy down rates or do some of the other reforms,” Stineman says. He says state lawmakers shouldn’t take away federal tax deductibility unless they address the overall tax situation.

“We support the elimination of federal deductibility with and only with offsetting tax reform. So, if you just got rid of federal deductibility today — our taxes would go up — not what we’re advocating,” Stineman says. Stineman says getting rid of the federal deductibility would help in bringing in new businesses to the state.

He says Iowa’s highest corporate income tax rate is 12 percent and that is the highest in the country and would be tied for highest if it dropped to 10 percent. “Now, it’s lower than that effectively because of deductibility, but that sticker shock hurts us,” according to Stineman.

The ICA priorities say tax reform should be geared toward making Iowa more competitive. The group also says programs, tax credits and incentives should be focused toward spurring growth. Stineman was asked if the group favors cutting back some of the tax incentives given to companies in recent years to build data centers in the state. He says the favor things like the data center credits because they bring a return on investment.

“Our mentality is that those programs are very important and need to forward as is, because there is a return on investment to the taxpayer,” Stineman says. “As it relates to taxes — we do want a reduction in the burden.” The ICA priorities say they favor tax credits that foster innovation, help grow the workforce and revitalize communities.

The ICA is made up of the chambers from the 16 largest cities in the state. The are: Ames Chamber of Commerce/Ames Economic Development Commission; Cedar Rapids Metro Economic Alliance ; Council Bluffs Area Chamber of Commerce; Dubuque Area Chamber of Commerce; Greater Burlington Partnership; Greater Cedar Valley Alliance & Chamber; Greater Des Moines Partnership; Greater Fort Dodge Growth Alliance; Greater Muscatine Chamber of Commerce & Industry; Iowa City Area Chamber of Commerce; Marshalltown Area Chamber of Commerce ; Mason City Chamber of Commerce; North Iowa Corridor Economic Development Corporation; Quad Cities Chamber of Commerce; Siouxland Chamber of Commerce.

Senator Chuck Grassley sent an early morning tweet, suggesting he’d been cut from the roster of senators who’ll work on a tax package.

Grassley said he had been “dropped” as a member of the conference committee that will come up with a final version of the tax bill. Grassley mentioned President Donald Trump in his tweet. Grassley said he wouldn’t be “in the front line fighting” for what he and Trump believe should be in tax package.

Grassley is the former chairman of the Senate Finance Committee, the panel that writes tax policy. Grassley remains on the committee and, in his tweet, Grassley notes he is the committee’s “senior Republican.”

Last week, Grassley sparked attention with a comment about the estate tax. Grassley said eliminating the estate tax rewards people who save and invest rather than those who spend “every darn penny they have, whether it’s on booze or women or movies.” Earlier this week, Grassley told Radio Iowa his comments were not about people who live paycheck-to-paycheck but about two fictional people — one who saves and one who “doesn’t save anything.”

Some Iowans are upset about Senator Chuck Grassley’s recent comment about how a person who doesn’t save money may just be blowing it on “booze or women or movies.”

Three groups are holding protests today outside Grassley’s offices in Waterloo and Des Moines. Grassley, a Republican, says he was defending the GOP effort to scale back federal estate taxes as a way to help people who invest.

“The language that you said I’m being criticized for was just kind of an expression of somebody that spends all their money and doesn’t save it,” Grassley says. “It’s not in any way talking about people that live from paycheck to paycheck.”

In an interview with the Des Moines Register, Grassley said he supported efforts to reduce estate taxes as “the government shouldn’t seize the fruits of someone’s lifetime of labor after they die.” Grassley says the critics are taking his comments to the paper out of context.

“The story that was written in its total was very accurate, expressing how I feel about people having incentives to save,” Grassley says. “I think the people that are commenting think that I’m making bad comments about people that live from paycheck to paycheck.” In the original quote from the Register article, Grassley says: “I think not having the estate tax recognizes the people that are investing, as opposed to those that are just spending every darn penny they have, whether it’s on booze or women or movies.”

Grassley says his comments were about two fictional people who are both making good money but who have different philosophies on saving and spending. “Somebody decides to spend from day to day all of his wages and doesn’t save anything and doesn’t have to worry about a death tax,” Grassley says. That’s the individual Grassley was referring to with the “booze or women or movies” quote, though in a conference call with Iowa reporters today, he said he also could have simply said, “buying new cars and going to movies and it would be the same thing.”

By comparison, he elaborates on the second individual’s spending habits. “The other person deprives themselves early in life to save and invest and create jobs, maybe wanting to pass on the family business or farm,” Grassley says, “and then death comes and you might be penalized for savings.” Grassley says the tax code should be more fair and not penalize people for frugality.

Members of the Iowa Citizen Action Network, the Main Street Alliance of Iowa and Americans for Democratic Action Iowa are hosting rallies today outside two of Grassley’s Iowa offices to protest his remarks.

A spokeswoman for I-CAN released a statement saying: “Not only is his comment sexist, and elitist, it shows just how far removed he has become from the hard working Iowans he is supposed to represent.”